Malaysia is facing a triple challenge in respect of the economy, says Minister in the Prime Minister’s Department Abdul Wahid Omar.
He described the first of these as a reversal of fund inflow into the emerging economy with the uncertainty not being good for the market.
“We need clarity,” he added.
He said the second challenge faced was the dependence on commodity exports and highlighted that efforts were being made to diversify the country’s export product line.
“The third is external and impacts the whole world. It is China’s economic slowdown. We have hedged against this by diversifying our trade and mitigating losses.
“Our major export markets are Singapore (accounting for 13.8 percent) followed by China (12.9 percent), Japan (9.8 percent) and the US (9.3 percent,” added Wahid, who is in New York as part of Prime Minister Najib Abdul Razak’s entourage at the United Nations session.
He told Bernama, despite the challenges, Malaysia’s economic fundamentals remained sound.
“I firmly believe in the new economic model that rests on the three pillars of high income, inclusiveness and sustainability. It is also designed to lead us to the developed nation status,” he added.
Wahid pointed out that the high-income goal can be achieved with a six percent growth rate to reach the target of US$15,000 per capita income by 2020, adding, Malaysia had already crossed the US$10,000 mark.
He highlighted the importance of implementing the Economic Transformation Programme and said under the 10th Malaysia Plan, growth had been registered at 5.3 percent from 2011 to 2015.
“A reason for our growth is that over the years, we have diversified the structure of the Malaysian economy and reduced the dependency on commodities.
“As a result, our commodity and mining sectors contributed just 18 percent to the Gross Domestic Product of the country. Our intention is to further reduce this share to 15 percent by 2020.
“ Our economy today is driven largely by the services and manufacturing sectors which together, comprised two-thirds of the GDP,” Wahid said.
The backbone of Malaysia’s manufacturing sector is the electrical and electronics industry.
The services sector comprises among others, the financial and business services, transportation and communication, gastronomy.
‘Need to increase per capita income’
The latest World Bank data suggests that the GDP-based per capita income in Malaysia was US$10,830 in 2014, surpassing for the first time the US$10,804 world average.
A recent meeting of the Global Science and Innovation Advisory Council (GSIAC) in New York and chaired by Najib, confirmed this.
However, there is need to increase the per capita income on an average by nearly US$700 annually between 2015 and 2020, to achieve the US$15,000 target for Malaysia to become a high-income nation.
The GSIAC is an expert body that includes renowned national and international personalities in the fields of economics, business, science and technology.
It has been assigned the task of helping Malaysia achieve the US$15,000 per capita income.
Malaysia has also achieved an impressive measure of sustainability in terms of managing its natural resources, particularly oil and gas.
“Malaysia has been recognised by the World Bank as a success story in terms of harnessing natural resources for the environment. We are not fully utilising our capacity of natural resources and are, in fact, preserving a reasonable percentage for future generations,” Wahid said.
He was also upbeat over the creation of the Asean Economic Community (AEC) by year-end.
The AEC will have a combined US$2.5 trillion GDP and consumer market of 600 million and be the world’s 7th largest economy.
Wahid said Malaysia was also supportive of the Trans-Pacific Partnership Agreement (TPPA).
“The TPPA is a good opportunity to create a new regional market, and for us, it is very important to finalise the few details being still sorted out,” he added.
A two-day TPPA ministerial conference was held in Atlanta from Sept 30.